In IoT’s early days, challenges, opportunities revealed

Challenges of deploying an Internet of Things use case outweigh the potential opportunities for many companies

In 2010, two entrepreneurs in Boston came up with the idea of turning shipping containers into miniature plantations, and Freight Farms was born.

The company’s Leafy Green Machines, outfitted with LED lights and humidity-controlled ventilation systems, provide an ideal growing climate for up to 500 heads of lettuce per week, not to mention other crops such as herbs and micro-greens.

Since day one, the containers have been connected to the Internet so they can be monitored and managed remotely. “We’re able to improve the value of the container without customers even knowing it,” says Kyle Seaman, director of farm technology. Freight Farms remotely monitors crop production for each of its roughly 80 farms. Software updates are pushed to the Leafy Green Machines to more efficiently manage the crops, such as by adjusting temperature, humidity and lighting.

It’s a modern example of a company born in the Internet of Things age. Experts are convinced that IoT will be a massive shift, but they also concur it’s still very early days for this market. Last year research firm IDC predicted that the global IoT market would increase from $655 billion in 2014 to $1.7 trillion by 2020.

A fundamental shift

“IoT is going to fundamentally shift the way companies operate and the value they’ll be able to extract,” says Sidharth Haksar, corporate development executive at software company Autodesk. He, along with Seaman from Freight Farms, were panelists at an event hosted by the Massachusetts Technology Leadership Council in Boston this week discussing revenue opportunities for this market.

“IoT will drive more meaningful interaction with customers: Companies will get information in real time, which will better inform design decisions and help vendors create new product, service and revenue models,” Haksar says.

IoT is ushering in four fundamental shifts for businesses, according to Jeff Kaplan, an analyst at THINKStrategies, It allows businesses to: React quicker; predict future events; more efficiently design products; and create new business opportunities.

Consider Big Belly Solar, a Massachusetts company that launched in 2003 to produce Internet-connected trash barrels used in parks and beaches. Each barrel sends a signal when it is full and needs to be emptied, allowing waste management companies to more efficiently plan their routes.

Big Belly can play into all four of those shifts Kaplan mentioned. They’re able to react quicker: Waste management comes to pick up the trash as soon as needed, but no earlier. Big Belly can use historical data to predict when the barrels will be full. The company could more effectively build new barrels based on data (put a larger barrel in areas that need to be picked up more frequently). And the idea could lead to new business models (the barrels are solar powered and could sell excess energy, or could display digital advertising). The connected trashcan is ushering in an era of smart cities; IoT opens a world of possibilities.

IoT challenges

There’s a reason it’s early days for IoT though. Many challenges accompany IoT projects.

Security: A world of connected devices exponentially increases attack vectors. Any device could be hacked, leading to proprietary data being stolen or devices being maliciously used. Stephen Marcus, an angel investor in IoT startups, says security is “The Wild West” of IoT. There’s a debate in the market, he says, over whether standards should be developed at various layers of the stack (infrastructure, applications, connectivity) so that security protocols can be developed to those standards. But he acknowledges it’s too early to pick standards since they could stifle innovation.

Fragmented market: IoT is built on various stacks: a connectivity stack for enabling devices to talk to one another and transfer data from the thing to a central system; an infrastructure stack for managing IoT devices; an application stack for analyzing information and having vertically-specific programs. These layers of the stack use myriad components: sensors, network equipment, servers, applications, etc. The good news, according to Kaplan, is “all the technology is here… The fundamental problem is how to bring it together for real-world use cases.” It’s a fragmented market with piecemeal components available from different vendors, but it can be a confusing and difficult practice to compile the needed pieces.

Data: “There’s so much data, sometimes you don’t even know what to look at,” says Marcus, the investor. IoT can create a plethora of data streaming in from connected devices. The data needs to be collected, analyzed and stored. At this point, Marcus says, a first step to IoT deployment is instrumenting devices, then you move to analyzing the data.

Vendor overload: The promise of IoT has created a “euphoric” atmosphere for vendors, says Haksar of Autodesk. There already may be too many IoT startups focused on consumer technology, Marcus notes. More startups focused on security, connectivity and data analysis are needed, he says. It’s never been easier to raise less than $2 million for an IoT startup, he says, but it’s just as competitive as ever to raise additional rounds after that. Haksar says IoT consulting services are the “last mile” of implementations that are the most difficult. Almost every major technology company has pivoted their message to incorporate IoT. Combine that with the startups and Haksar calls it “a bunch of hammers looking for nails.” He says many IoT projects at large enterprises are in “the grind of proof of concept.”

Push and pull to IoT: Xively is a company that builds IoT “plumbing,” as Seaman from Freight Farms called it. The company – which is owned by LogMeIn – manages the connection of data from devices to the cloud. For Freight Farms, Xively aggregates data that is collected in the pods, sends it and processes it in the cloud. Xively GM Paddy Srinivasan agrees it’s early days for IoT, but says pockets of use cases are emerging. Forward-looking businesses and startups embrace the trend.

Others, in regulated industries, are being “pushed” into adopting IoT. Energy companies need to track solar installation efficiency, for example, and are required to build connectivity into their products. The combination of technology advancing, product and service offerings being more cohesively bundled for easier consumption, plus industries being pushed into adopting the technology, are all tailwinds for this still burgeoning industry.

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Senior Editor Brandon Butler covers the cloud computing industry for Network World by focusing on the advancements of major players in the industry, tracking end user deployments and keeping tabs on the hottest new startups.